chap011 - Chapter 11 11-1 1 2 3 4 5 D A B B A 6 7 8 9 10 C...

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Chapter 11 11-1. 1. D. 6. C. 2. A. 7. C. 3. B. 8. A. 4. B. 9. C. 5. A. 10. B. 11-2. 1. B (See Chapter 9 for Public Colleges and Universities). 2. C (See Chapter 9 for Public Colleges and Universities). 3. A (See Chapter 9 for Public Colleges and Universities). 4. C. 5. C. 6. D. 7. D. 8. C. 9. B. 10. D. 11-3. A. The three net asset classifications, required by FASB standards, are (1) Unrestricted, (2) Temporarily Restricted, and (3) Permanently Restricted. B. The financial reports required by FAS 117 are: (1) statement of financial position, (2) statement of activities, and (3) statement of cash flows. In this chapter, two statements, the statement of unrestricted revenues, expenses, and other changes in unrestricted net assets and the statement of changes in net assets are substituted for the statement of activities, which is expressly permitted by the FASB. C. An Endowment is a permanent fund, a fund that will never be expended, in accord with restrictions placed by the donor or grantor. An endowment is recorded in the permanently restricted net asset classification. A Term Endowment exists when a donor or grantor specifies that the principal not be expended for a certain period of time or until a specified event occurs, then released for either unrestricted or restricted purposes. A term endowment would be recorded in the temporarily restricted net asset class. A Quasi-Endowment exists when a donor or grantor makes an unrestricted contribution and the governing board of the institution decides to invest the funds, either permanently or temporarily. Quasi-endowment funds are recorded in the unrestricted net asset class, but may be displayed separately in that category. D. 1. When an endowment gift is received in cash, an entry is made debiting cash (or other assets) and crediting contributions-permanently restricted (a revenue account). Income from the endowment may be unrestricted or restricted, and some may be required to be added to the endowment. Entries recording the income would be recorded in the appropriate net asset class. 11-1
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11-3 (D) (Continued). 2. In 2006, the gift would be recorded as a debit to cash (or other asset) and a credit to contributions-temporarily restricted, a revenue account. In 2007, the funds would be reclassified from the temporarily restricted to the unrestricted net asset class. This reclassification entry could be made at the beginning of the year, assuming cash has been received. 3. In 2006, the gift would be recorded as a debit to cash (or other asset) and a credit to contributions-temporarily restricted, a revenue account. When the purpose is fulfilled, in this case, 2007, the funds would be reclassified from temporarily restricted to unrestricted net assets. At the same time, an expense would be recorded in the unrestricted net asset class. E.
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chap011 - Chapter 11 11-1 1 2 3 4 5 D A B B A 6 7 8 9 10 C...

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